Ways To Save Money on a Tight Budget

Before you can make meaningful progress on saving money, it helps to know where you are currently with your finances. You may not know if you are making the best use of your income and or are squandering it on unnecessary expenses.

A budget helps you make a plan for every penny that’s spent so you can adjust as needed to better meet needs and save for future goals. Read on to learn several ways that may help you save money on a tight budget.

How To Create a Budget

You may only need to make a simple budget plan at first. To create a basic budget plan, follow these steps:

1. Figure Out Your Total Net Income 

Add up all money you receive from a job, child support, gig work, or government payment (such as Social Security income) in one month. Make sure your numbers reflect what you receive after taxes — this will be your net income.

2. Add Together All Your Spending

Include everything purchased, whether paid for with cash, a debit card, or a credit card. If you aren’t currently keeping track of spending or don't have records of everything, start fresh the next month and keep track of all expenses for the next 30 days.

3. Split the Expenses into Buckets

With spending tracked, review each expense and decide where it fits into a budget. For example, a housing category would include rent or a mortgage, while an auto expenses category would include fuel, car payments, vehicle insurance, and oil changes. Put each expense into a category. You can always change categories later if needed.

4. Plan for the Following Month 

Knowing what you’ll receive in income, give each dollar you earn a job. For example, your first $800 might be spent on rent or a car payment. Figure out how your total income will be spent ahead of time.

5. Track as You Go

At the end of the month, look to see how closely you have adhered to your plan. Did you overspend on dining out? Was your electric bill higher than anticipated? Adjust for surprises and revise your budget to more closely match reality.

6. Use Tools When Possible

You don’t have to spend money on a complex budgeting app — just pick a simple tool that works from your phone or computer that allows you to track each purchase. For instance, you can make a budgeting spreadsheet that helps you visualize where to potentially adjust your expenses over time.

The 50/30/20 Rule Explained

If your budget still needs adjusting, consider the 50/30/20 method of saving and allocating money. This tool helps you plan for expenses while still saving for fun activities and long-term goals. Here’s how it works:

Every time you get paid, take your after-tax income and divide it into three categories:

• 50% - This is for your needs, which includes the necessary spending each month. Think of this as what you need to live, such as housing, utilities, food, healthcare, and the minimum payments on any debt.
• 30% - Reserve this for your wants, which includes fun expenses like dining out, gifts for friends, concert tickets, streaming services, and the costs of enjoying life.
• 20% - Set this amount aside for savings and paying down additional debt, such as putting money into a savings account for a future home purchase, adding money to your retirement account, or paying off a credit card bill in full. 

Ways To Cut Expenses Each Month

Even with a budget, you may need to trim some expenses to make your money last throughout the month. These tips for trimming expenses may help save a bit each month, even when cash is tight.

How To Save Money on Utilities

The electric bill can make up a significant part of a household budget, as the average bill in the U.S. exceeds $150 a month.^[1] Fortunately, there’s some wiggle room in this number, with many opportunities to cut costs over time. Tips for reducing electricity usage include:

• Ask the utility company if they offer level billing. This payment arrangement charges a customer the same flat rate each month based on previous energy usage patterns. Contract terms vary, but any overages will be credited at the end of the year term. 
• Shut off appliances overnight or when not in use. Consider investing in power strips with simple on/off switches to cut power to multiple devices at once.
• Adjust your thermostat when you’re not home or purchase a programmable thermostat that adjusts it for you.
• Turn down the temperature on your water heater to 120 degrees, and use cold or warm water for washing clothes when possible.
• Adjust to the sun’s light and heat by opening shades during cooler days and using black-out curtains when it’s hot outside.
• Take care of your heating and cooling system by changing filters as recommended and handling maintenance as soon as possible.
• Use energy-efficient fans to move air around the home. 

Other ways to save money on a tight budget include using water more efficiently. Avoid running the dishwasher or washing machine unless the load is full, opt for shorter showers instead of baths, and promptly fix leaky pipes or faucets to reduce water waste. 

How To Save Money on Food

Food is another category where you might be able to save on spending. While limiting how many meals you eat out at restaurants may improve your budget, skipping social gatherings with friends or coworkers is not always possible. Stick to lunches out, which generally cost less than dinners, or take advantage of promotional offers from within each restaurant’s mobile app. Sign up for email offers, which often include coupons. Just don’t use these savings opportunities as an excuse to dine out when you don’t need to.

To save on eating at home, make a shopping list and have a meal plan before you get to the store. This may help you focus your spending on just the essentials and keep you from impulse purchases.

Also, buying fruit and vegetables in season gives you access to better-quality foods that often cost less than their out-of-season counterparts.^[2]

Grocery stores, like restaurants, also offer mobile apps. Download them before you get to the store to see what’s on sale and to clip digital coupons to make good buys even more affordable. 

How To Save Money on Gas

Fuel is one expense that can be difficult to budget for simply because the price can change daily.

To get the best price on gas in your area, use a comparison shopping app such as GasBuddy®, which provides real-time prices. Plan your trips ahead of time, and combine activities to reduce trips around town. You can even optimize Google Maps^® or Apple Maps^® to show you the most fuel-efficient route. 

Additionally, a well-maintained car typically uses less fuel.^[3] Be sure your tires are inflated to the proper pressure and complete routine maintenance tasks on time, such as changing your oil or replacing brake pads when needed.  

You Can Still Save on a Tight Budget

Remember the 20% of the 50/30/20 rule? It’s designated for putting money aside for later, and it’s an important part of planning for your financial future. Those without a lot of extra money may find it hard to set aside money for this purpose, but PNC Bank offers an Auto Savings program to make it seamless.

Add the amount of the automatic savings to your budget each month. That way, you won’t accidentally spend it on something else. When it comes time for the savings deposit to be made, it will automatically go into the savings account, where it can be stored for a future goal (and earn interest over time).